Maker of electric car wants to sell from mall

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A Tesla Model S, displayed at the carmaker’s California factory, can be seen but not purchased at the Natick Mall.

By Ellen Ishkanian
Globe Correspondent
April 21, 2013

Tesla Motors will go before the Natick Planning Board on Wednesday night to ask for an exception to zoning regulations now preventing the manufacturer of upscale electric cars from selling to customers at its Natick Mall “gallery.”

The exception would allow Tesla to consolidate its operations in Natick, which now consist of a showroom at the mall, where customers can see a car and get information, and a sales office on West Central Street, where actual sales are handled.

The request is part of the California company’s push to sell its cars directly to consumers rather than going through independent dealerships, which is the traditional sales model and is required by statute in Massachusetts and across the country.

The company has won the first round of a lawsuit filed against it by the Massachusetts State Automobile Dealers Association, while a separate lawsuit filed by the dealers group against the Natick Board of Selectmen is pending.

“Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars,” Musk wrote in a blog post from October that was e-mailed to the Globe by Tesla Motors communications director Shanna Hendriks.

“This is a car that will keep getting better the longer you own it, creating a difficult comparison for dealers that still have to sell large numbers of old technology gasoline cars,” Musk wrote.

For the Massachusetts State Automobile Dealers Association, however, the Model S is a car like any other, and talk of a new way of selling them is nothing more than an attempt to get around consumer protection rules.

“Franchises exist to protect the consumer,” said Robert O’Koniewski, the association’s executive vice president. “Without that layer of protection, the factory manufacturer can do things outside the law, and consumers would have little recourse.”

For example, O’Koniewski said, without a dealership or middle layer, it would be difficult or impossible for individual consumers to find a remedy when problems arise with their new car.

Where are they going to go to lodge a complaint, or take their car for a warranty-covered repair, he asked.

The dealers association sued Tesla to prevent it from opening in the mall last fall, but a Norfolk Superior Court judge dismissed the case, ruling that the association lacked legal standing to challenge the arrangement since it did not have a dealership affiliated with Tesla.

‘Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars . . . and selling the new technology of electric cars.’

“We feel we’re in the right,” said O’Koniewski. “We are appealing that ruling.”

The association’s lawsuit against the Board of Selectmen says that it improperly granted a license for the sales office. The case has yet to be heard in court,
O’Koniewski said.

He said the dealers association also opposes the zoning waiver being sought by Tesla, and will “have a presence” at the Planning Board’s hearing, set for 8:15 p.m. Wednesday.

O’Koniewski said that Tesla selling directly to customers without using a dealership is a “prohibited activity,” and that asking Natick “to grant permission to engage in illegal activity, which we are already challenging in court, would be compounding the problem.”

O’Koniewski said if Tesla wants to change the way cars are sold across the country, “they should work with the legislatures in the 50 states to make their case.”

The company is following that strategy in Texas, where Elon has lobbied the state Legislature for a way around the dealership laws there.

The company is also fighting for the right to sell directly to consumers in several other states, including New York, where a judge recently ruled in its favor in a lawsuit similar to the Massachusetts case, and Minnesota, Hendriks said.

The Tesla gallery at the Natick Mall has a Model S for people to look at, but it is disabled to prevent it from being operated. Any test drives must be arranged through the sales office.

The arrangement has proven difficult for consumers, who often come into the Tesla gallery with little knowledge about the car, Hendriks said.

“We are a new brand,” she said, adding that the company chooses locations in malls with high-end stores such as Neiman Marcus and Nordstrom to attract people who may be interested in Model S.

According to Tesla’s website, the “premium electric sedans” sell for between $62,400 and $87,400, after a $7,500 federal tax credit.

Since the company has no dealerships, Hendriks said, malls are a location where the new brand can “get in front of the most people.”

At Wednesday’s public hearing before the Planning Board, Tesla representatives will present their case for a waiver to the zoning regulation prohibiting the use of a “salesroom for motor vehicles” at the mall, according to its application.

Hendriks said if the waiver is granted, there are no plans to expand the showroom, but instead of directing consumers to its website or sales office, Tesla salespeople could set up test drives, accept payments, and complete sales right at the mall.

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